Shopify jumps ahead of earnings while bond yields slide after data
Markets recalibrated Tuesday after U.S. retail sales stalled in December, shifting investor attention toward interest-rate expectations and cross-border market positioning.
U.S. retail sales were unchanged in December from November, when sales rose 0.6%, according to the U.S. Commerce Department. Economists had expected a 0.4% increase. Following the data, traders increased bets that the U.S. Federal Reserve could cut interest rates three times or more this year, based on CME Group data, although most market participants still see two cuts as the more likely outcome.
“I do think we are seeing bond yields sell off after the retail sales news,” said Mona Mahajan, head of investment strategy at Edward Jones. “Perhaps an indication that the Fed may be more inclined to bring interest rates lower if they see this one print turn into a trend. Now, keep in mind this is just one data point.”
Equity markets showed mixed reactions as investors weighed the implications of the data alongside ongoing earnings reports. BNN Bloomberg reported that Canada’s stock market gained ground, while major U.S. indexes ended the session in different directions.
The S&P/TSX composite index rose 233.51 points to close at 33,256.83. In New York, the Dow Jones industrial average gained 52.27 points to 50,188.14. The S&P 500 fell 23.01 points to 6,941.81, while the Nasdaq composite declined 136.20 points to 23,102.48.
Sector positioning continued to influence market performance. “It feels like generally, the momentum has been moving away from mega-cap tech and AI more into the cyclical parts of the market,” Mahajan said. She noted that Canada’s equity market has shown resilience across shifting sector leadership. “I think Canadian equities have benefited on both sides of the equation. On days when areas like energy and materials are strong, Canada has an overweight concentration in those areas and on days where areas like tech are strong, they can continue to show some stability and move higher.”
Technology shares were mixed, though Shopify Inc. advanced 7.41% ahead of its scheduled fourth-quarter earnings release on Wednesday. Corporate earnings reports are expected to continue through the week in both Canada and the United States.
“For the full year, we expect double-digit earnings growth for the TSX as well as the S&P 500,” Mahajan said. She added that earnings growth in Canada is expected across several sectors, including materials, while growth in the U.S. is expected in both technology and non-technology segments.
The retail sales report added another data point to an already active macroeconomic backdrop. Consumer spending is a central driver of the U.S. economy, and recent data have become a focal point for investors assessing the outlook for monetary policy. Market participants have also continued to balance rate expectations against sector-level earnings prospects and relative valuations.
Currency and commodity markets recorded modest moves. The Canadian dollar traded at US$0.7383, compared with US$0.7366 on Monday. The March crude oil contract declined US$0.40 to US$63.96 per barrel. The April gold contract fell US$48.40 to US$5,031.00 an ounce.
While a single economic release does not determine policy direction, Tuesday’s data influenced short-term market positioning. Investors continued to assess how interest-rate paths, earnings results, and sector exposure may interact in the months ahead, particularly as monetary policy expectations remain sensitive to incoming economic indicators.
